(TNS) — Minnesota state government has authorized tens of millions of dollars in grants to support expansion of the state's high-speed communications network into underserved towns and rural areas.

A new report is recommending another $110 million be budgeted for the effort during the 2017 legislative session that begins next week. But while lawmakers and Gov. Mark Dayton have had well publicized debates over the grant funding, the telecommunications industry has been winning quieter battles that may be undermining the Border-to-Border Broadband Development Grant Program, according to Dan Dorman.

"It's really been a tough uphill battle," said Dorman, executive director of the Greater Minnesota Partnership, which lobbies for policies that promote outstate economic development.

One of Dorman's biggest concerns is a change in the grant program approved by the Legislature in 2016 that allows existing cable companies and other Internet providers to challenge grants being sought by a new competitor looking to enter a marketplace.

The provision seemed reasonable at first blush — that existing companies could object to state aid being provided to competitors if the existing provider promised to upgrade its service.

"On the surface, a lot of legislators said, 'Well, that sounds reasonable — let the local provider have that chance," Dorman said. "... It sounds like it just protects the local guy, but it really is really anti-competitive and keeps the competitor out."

The problem is that incumbent providers can challenge most grant applications by promising that they are planning to provide better service. The promised service can be substantially slower than what the new competitor is proposing, and the existing providers don't have to actually follow through on their promise.

With 2016 coming to a close, not a single grant has been authorized from the $35 million in funding for the program approved by the Legislature last spring.

"It sure looks like — since the grants haven't been awarded and everybody's hush-hush — that there's a problem with the challenge process," Dorman said. "... At least the rumors are that it's causing problems."

He also worries that companies in coming years will choose to back off on expansion plans into underserved areas, deciding that any grant application will be challenged by an existing provider.

"What we don't know is, will this have a chilling effect moving forward?" he said, noting that it can cost $25,000 or more to develop preliminary plans for expanding a broadband network into a new city or rural area.

The Governor's Task Force on Broadband, which released its recommendations on Tuesday, doesn't specifically call for changing the challenge process. Dorman was somewhat heartened, though, by the inclusion in the report's appendix of a letter from the Greater Minnesota Partnership and 16 other organizations highlighting problems with the challenge process.

"Hopefully, that language can be changed (in the upcoming legislative session)," Dorman said.

Republicans will have a stronger voice at the Capitol following the 2016 general election, and GOP lawmakers have tended to be more skeptical of the grant program than Democrats. Dorman, a Republican former lawmaker from Albert Lea, said the Greater Minnesota Partnership will keep fighting for changes in the challenge process, for more broadband grants aimed at promoting economic development in outstate cities and for another major investment in the grant program.

Lobbying for more broadband access has probably consumed more of the Partnership's time and resources than any other issue, and Dorman said the organization may have to pare back its efforts somewhat.

"We just can't compete with the onslaught from the industry," he said.